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A number of the annuity products currently on the market can help provide a secure stream of income during retirement. Some annuities that may be suitable for your unique situation are fixed annuities, with principal protection and no market exposure, and fixed index annuities, with principal protection and the potential for higher earnings with increases in a linked Market Index.

Riders are usually available, for an additional annual premium, to include protection against inflation and other benefits. Some of the policies available will include an up-front bonus that begins earning interest along with your premium amount immediately.Some of the features that are available to you through fixed index annuities are bonuses, various crediting methods, and allocation options that give you choices for your money.

Most annuities have a surrender period for the first five to 15 years of ownership; early withdrawal will deplete your principal by the amount of surrender charge still in force. Bonus annuities may carry higher fees and charges than annuities without the bonus feature, may only accumulate interest prior to annuitization, and may not pay the bonus in case of early withdrawal. 

How a Fixed Index Annuity Works

Most fixed index annuities have two phases. First, there’s an accumulation phase, during which you let your money earn interest. This is followed by a distribution or payout phase, during which you receive money from your annuity. A fixed index annuity also guarantees you will receive at least the minimum guaranteed interest credited to the contract. Remember that all of these guarantees are backed by the claims-paying ability of the issuing company. With a fixed index annuity, you defer paying taxes on your contract’s interest until you receive money from the contract. Tax-deferred interest means the money in your contract can grow faster!

Today’s fixed index annuities offer a range of features and benefits that may help you accumulate assets for retirement, preserve what you’ve accumulated, turn those assets into a guaranteed stream of income, and help you pass on a financial legacy to your loved ones. You will be guaranteed the return of the money you originally paid into your annuity, unless you surrender your annuity during the surrender charge period.

  1. Phase 1: Accumulation
    The accumulation phase begins as soon as you purchase your annuity. Your annuity can earn a fixed rate of interest that is guaranteed by the insurance company or an interest rate based on the growth of an external index.
  2. Phase 2: Distribution
    The distribution phase of a fixed index annuity begins when you choose to receive income payments. You can always take income payments in the form of scheduled annuitization payments over a period of time, including your lifetime. And many fixed index annuities allow you to take income withdrawals as an alternative to annuitization=payments. Either way, you can choose from several different payout options based on your personal needs, including options for lifetime income, guaranteed.

Understanding the Benefits

A fixed index annuity (FIA) offers a unique combination of benefits that can help you achieve your long-term goals. No other product offers the tax deferral, indexed interest potential, and optional benefits to protect your retirement assets and income.

  • Tax deferral
    Under current federal income tax law, any interest earned in your fixed index annuity contract is tax-deferred. When you begin receiving money from your contract, you pay ordinary income taxes only on your interest. Withdrawals are taxed as ordinary income and, if taken prior to age 59½, a 10% federal tax penalty may apply.
  • Indexed interest potential
    Fixed index annuities provide an opportunity for potential interest growth based on changes in one or more indexes. Because of this potential indexed interest, FIAs provide a unique opportunity for accumulation. And since the interest your contract earns is tax-deferred, it may accumulate assets faster. In addition to potential indexed interest, FIAs can offer you an option to receive fixed interest.
  • Protection
    Fixed index annuities offer you a level of protection you may find reassuring. That protection can benefit you in three separate ways:
  • Accumulation
    Your principal and credited interest are protected.
  • Guaranteed Income
    You can be protected from the possibility of outliving your assets.
  • Legacy
    If you pass away before annuity payments begin, a fixed index annuity may help you provide for loved ones.

Get the Basics on Indexed Annuities

Questions to Ask Before Purchasing


Annuities are long term vehicles that offer tax deferral, a variety of income options, and a death benefit.

Fixed Indexed Annuity (FIAs) are unique products that offer some of the guarantees of fixed annuities combined with the opportunity to earn interest based on changes in an external market index – without directly participating in the market.

Your money will not be affected by market index losses, and will only benefit from increases in a market index. FIAs can be an important financial tool that provides earning potential while keeping principal safe from market fluctuation.

These products offer a range of features that may include:

  • Various crediting methods
  • Allocation options to earn potential indexed interest
  • Bonuses

They continue to develop new and innovative fixed-index annuities that provide the guarantees of a fixed annuity with the potential for indexed interest. Please understand that bonus annuities may carry higher fees and charges than annuities without the bonus feature.

Guarantees are backed by the financial strength and claims paying ability of the Insurance Company. Please consult with us to determine if a FIA is right for you.


Only you know your goals for retirement, so only you can determine your needs. A fixed index annuity isn’t the right solution for everyone, and you shouldn’t buy one unless it’s appropriate for your situation. You may want to consider a fixed index annuity if the following benefits are important to you:

  • Tax deferral to help you reach your retirement goals.
  • Indexed interest potential to help accumulate your retirement savings.
  • Protection benefits that can help protect your retirement assets and income.

Purchasing an annuity is an important decision, and one you should only make after consulting with your financial professional. For more information on fixed index annuities, talk to your financial professional.


In recent years, the financial markets have experienced extreme swings. This historic volatility combined with the limited availability of traditional retirement income sources, such as defined benefit pension plans, has placed a greater responsibility on Americans saving for their future.

With this greater responsibility comes a need for financial solutions that can help provide a new level of protection for retirement savings. Whether your long-term objective is to build a source of guaranteed lifetime income, save for a specific retirement goal, or leave a legacy for your loved ones, We can help by offering annuities with benefits designed to meet your retirement needs.

We can insure a portion of your retirement assets and look beyond uncertainty as you prepare for your future.


A third important advantage of a fixed index annuity is the range of guarantees and optional protection benefits available. These benefits allow you to transfer risk to the insurance company issuing the fixed index annuity. These guarantees help protect your assets, your retirement income, and your beneficiaries. In exchange for the risk transfer, the benefits may carry an additional cost that will vary by product and company.

Annuities are subject to surrender charge periods which can vary, but are generally between five and 10 years in duration. As long as you abide by the terms of your contract, you will not lose any of the money you place in your annuity due to surrender charges. And any interest credited to the contact is locked in and protected as well.

Guaranteed Income
A fixed index annuity puts you in control of your future income, based on the annuity you choose and how much money you put into it. After your contract has had an opportunity to earn interest over its deferral period, you can begin distribution. You can then receive your contract’s values in a stream of income that will last your lifetime (or longer). The amount of your payments is based on the value of the contract on the date you begin distribution and the payout schedule you choose. You generally have two choices for receiving income payments: annuitization payments or income withdrawals – each of these payment types is taxed differently. For annuities that are not held in a qualified plan such as an IRA or a 401(k), part of each annuitization payment is a tax-free return of what you paid for the annuity and part is taxable as interest you earned on the annuity. On the other hand, income withdrawals under the same annuity are fully taxable until the interest you earned has been taxed, then you withdraw what you paid for the annuity tax-free. It’s always a good idea to consult with your tax advisor before choosing between annuitization payments and income withdrawals if you have any questions or concerns about which income payment type may be best in your own particular tax situation.

Protection With Income That Can Increase
As we noted, an FIA allows you to convert your annuity’s value into a series of fixed-amount payments. Depending on the product you choose, many FIAs go beyond this. They offer benefits or optional income riders with payments that can increase to help you keep pace with rising costs throughout your retirement. Your income payments will be scheduled as withdrawals you can begin anytime after you reach a certain age (often age 60). And with some FIAs, your income payments will be larger if you postpone taking them for a few years. These income riders or benefits provide a valuable benefit, but they usually come at a cost. Talk to your financial professional about the income options offered by the FIA you are considering, and be sure you understand any costs and restrictions. Please note that withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Your payments may increase based on positive changes in your selected indexes.

Legacy Benefit
If you pass away before you begin to receive scheduled annuity payouts of the contract’s value, your beneficiary will receive a death benefit. And in some cases, even if you pass away after you’ve begun to receive income from the annuity, it’s still possible your beneficiary will receive a death benefit. Your beneficiary may choose to receive your contract’s values in a single payment or in a series of payments over time. The death benefit may be a reason some individuals purchase annuities even though they have no immediate plans to receive their contract values. They simply want to know the money is available (may be subject to a surrender charge) should they need it – and that it can be passed on to their beneficiaries if they don’t use it.

Financial Strength
Because the guarantees in an annuity are important, it’s important to consider who backs those guarantees. The guarantees are backed solely by the insurance company that issues the annuity. That’s why you should know about the financial strength and stability of the company. Ask about their: Ratings – independent agencies’ opinions of a company’s strength and ability to meet its ongoing insurance policy and contract obligations. Risk management capabilities – a company’s track record of successfully hedging against potentially extreme market events. management philosophy – a company’s commitment to stability and reliable, long-term performance.


During the accumulation phase of your contract, any interest growth is tax-deferred. If you purchase your fixed index annuity with after-tax dollars, you will only pay ordinary income taxes on your earnings – not on your premium payments – when you begin withdrawing money. Tax-deferred growth, compounded over time, may increase the amount of savings and income your fixed index annuity generates for your retirement. Tax deferral is also a benefit of traditional IRAs and 401(k)s. However, annuities don’t have any government-imposed contribution limits. Because of that, they can often be a good choice if you want to save more than IRAs and 401(k)s allow and still enjoy tax-deferred growth potential. Purchasing an annuity within a retirement plan that already provides tax deferral results in no additional tax benefit. So use an annuity to fund a qualified plan based upon features other than tax deferral, such as lifetime income options or the guaranteed death benefit.

Tax-deferred growth, which can compound over time, may increase the amount of savings and income your fixed index annuity generates for your retirement.

Factors That Influence How an FIA’S Indexed Interest is Calculated
When you purchase your fixed index annuity, you often can choose the index(es) to which you allocate your annuity’s value. You can also often choose the crediting method used to track changes in your selected index(es). Before we discuss those crediting method choices, let’s look at some other factors that will affect how your indexed interest is calculated.

  • Cap:
    Some fixed index annuities set a maximum rate of interest (or cap) that the contract can earn in a specified period (usually a month or year). If the selected index increase exceeds the cap, the cap is used to calculate your interest.
  • Participation Rate:
    This determines how much of the index’s increase will be used to compute the indexed interest rate. If an annuity has a 100% participation rate, the contract would receive 100% of the indexed interest achieved in a given contract period, assuming, in this example, no cap or spread applies. Participation rates are generally applied after caps, and before a spread.
  • Spread:
    The indexed interest for some annuities is determined by subtracting a percentage from any gain the index achieves in a specified period. For example, if the annuity has a 4% spread and the index increases 10%, the contract is credited 6% indexed interest.


Insurance Company:
This is the company that issues the annuity. The insurance company is responsible for Insurance company backing the annuity’s guarantees.

Contract Owner/Annuitant:
These usually are the same person, but they can be different. The owner makes decisions about the annuity, such as who the beneficiaries are. The annuitant is the person whose life expectancy is used to calculate annuity payments.

The beneficiary is the person who receives the annuity’s death benefit. Naming one or more beneficiaries is important, because without a Owner Annuitant beneficiary, the money in your annuity could be subject to probate.


  1. 100% Safe
    No stock market fluctuations. Principal and interest guarantees.
  2. Tax Deferral
    Interest earned is tax deferred. No 1099’s
    (if no withdrawals are taken)
  3. Good Returns
    Attractive yields (plus tax deferral). First year interest rate
    enhancement plus rate option.
  4. Liquidity
    Surrender-free withdrawal features usually limited to 10% free
    withdrawal annually in most contracts.*
  5. Estate Planning
    Proceeds of a fixed annuity are paid directly to the named
    beneficiary. Avoid the cost, delay and expense of probate.
  6. No Sales Fees
    100% of your premium earns interest from day one.
  7. Flexibility
    Between contribution and payout options, there may be a good
    fit for many people.
  8. Diversification
    Fixed annuities can play an important role in a well-diversified
    investment portfolio.
  9. Guarantees
    100% Premium guarantee from the issuing insurance company.
    Minimum interest rate guarantee. Guaranteed lifetime income options.
  10. One of a Kind
    Because what other accumulation vehicles can provide the
    9 great reasons listed here?

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